tv Wall Street Journal Rpt. NBC July 10, 2011 4:00pm-4:30pm PDT
even though i work here, i've lost weight. wow. yeah. carry on. (announcer) 28 delicious flavors at around 100 calories each. hi, everybody, happy summer. welcome to "the wall street journal report." i'm maria bartiromo, reporting from right outside the new york stock exchange. a weak jobs number, worries about the debt ceiling and the deficit. what does it mean to the markets? my conversation with the chairman of the house budget committee, paul ryan, talking with me about medicare, compromise, and the federal budget. and what is cooking when it comes to trends in barbecue? we'll check out the hot grills, the tasty dishes and find out what is new in the backyard. the "wall street journal report" begins right now. >> this is america's number one financial news program, "the wall street journal report." now maria bartiromo. >> here is a look at what is
making news as we head into a new week on wall street. a very disappointing jobs report out on friday. nonfarm payrolls rising only by 18,000 for the month of june. that is the weakest number since september of last year. most analysts were expecting numbers north of 100,000 jobs created. the unemployment rate, meanwhile, bumped up to 9.2%, the highest it's been since december. the holiday-shortened week saw the bulls running early as the dow and the s&p 500 closed at their highest level in almost two months on thursday, while the nasdaq rode an eight-day winning streak. the poor jobs number pushed the numbers down on friday. congressional lindbergh fielders from both parties met with president obama at the white house this week to try to hammer out an agreement to raise the debt ceiling and cut spending. the president called the meeting constructive. america will reach its debt limit on august 2nd. same store sales coming in stronger than expected, up 6.5% that beat wall street expectations of 4.9% growth. sales were lifted by bargain
prices. from the jobs report to the debt court of appealing to the deficit, all major stories impacting america's economy and the market. joining me now to help explain what it all means and what may happen next, carla harris, morgan stanley investment management, managing director and komal sri-komar, tcw chief global strategist. good to see you both. >> thank you, maria. >> let me pick it up with you, sri and the jobs numbers out on friday. only 18,000 jobs created for the month of june, much lower than what most people expected. the unemployment rate even ticking up to 9.2%. what do you think this tells us about where we are in this recovery? >> a couple of things, maria. first, it was uniformly bad. the increase in the unemployment from 9.1 to 9.2% to the so-called open unemployment rate which takes into account employees working part time that went from 15.8 to 16.2%. that to me is very serious. and we have a lot of people who
are more than six months unemployed. what does it mean? i think i be talking for a while that this economy is not going to be having self-sustained economic growth. it is going to go into a second dip. and this suggests to me that all the fiscal stimulus in the qe1 and 2 has simply not worked maria. that's what it means. >> carla, you have written a book on career success. what can people do to actually create value for themselves and create job security? such an environment? >> thing is three things people should do in this environment. number one, if you are looking for a job and you can't find a job to your background and experience, look or the a job that will add to your skill set so you will be even more prepared when this market comes back and you'll have even more to sell. the second thing i think you should do, if you have a job, find ways to create new value within your organization. so maybe the thing that you normally do isn't producing the same result, but take that out of the box project, that out-of-the book idea because
that could create value at your firm. and the third thing you should do most importantly is invest in relationships during this period of time. it's not just what you know but it's about who you know. >> are you surprised at how tough it's been? >> i tell you, i am surprised that it's taken as long as it has. but i'm not as bearish as what kumar just talked about. i think we hit a soft patch. i think there have some things that happened out of the ordinary this year. you think about the tornadoes, the floods that have destroyed homes, that have destroyed businesses. those things have taken away jobs as well. >> yeah. >> so i think we have hit a soft patch. but i think we're still on target for the recovery and the improvement that we've seen so far. >> and of course we still have congressional leaders this week meeting with the president to try to come up with some kind of agreement about raising the debt ceiling, cutting spending, cutting the deficit. how do you think this plays out? >> i think eventually there is going to be an increase in the debt ceiling. whether it happens by august 2nd or not, there is a technical default. it still happens within a couple of days after the august 2nd deadline passes. to me a lot more serious, a lot
more important is what do we do with the fiscal deficit and spending. if you increase the deficit as a debt limit from $14.3 trillion let's say to $17 trillion so that it doesn't get reached any time soon, and we increase spending, that to me would not be a good solution. >> carla, let me get your take on earnings season. we are embarking now on a new quarterly earnings reporting season. and so far this is the one area of this economy that really has been vibrant, the corporate sector. are you expecting this soft patch to impact earnings? what is your expectations? >> my expectation is this will be another good earnings season overall. i think companies have been cautious about their expectations with respect to performance and now how they have that message sent to the street. i think they have set themselves in terms of beating the street's expectations or meeting the street's expectations. i think there is still a lot of corporate cash out there. so i expect this to be overall another good season. >> and we have to talk about europe as well, because the economy is still buffeted by
events happening overseas. >> absolutely. >> whether it's the debt crisis in europe or china, raising interest rates, trying to slow down inflation, slow done an overheating economy there. now there are new concerns about italy. >> on italy, as you mentioned, this week we had italy come in the crosshairs which is a very new development for the country. and the reason for that is because the greek solution is just a band-aid. as long as we don't have a debt reduction for it, for greece, and permanently solve greece's problem with paying debt, spain and perhaps even italy can continue to be there. and italy as we know is 50% more debt than spain, greece, portugal, ireland put together. it's too big to save. and that makes it very difficult, very important for the global economy. >> what unprecedented issues? carla, do you think all this is priced into the market? what kind of a market are you expecting for the rest of the year? do you think we take a downturn
in stock prices if in fact europe continues to worsen, if in fact we get that guidance that sri is talking about that they're actually taking guidance down for the rest of the year. >> i think people will be cautious. i'm not sure they'll be as strident taking it down. but a note of caution for the second half of the year. there are still some things that are outstanding, if you will. as you know, my consistent refrain is that the market hates uncertainty and surprise. so i think that overall we'll have a positive market environment. but i do think it will be in a trading range as some of the uncertainties like the ones you articulated work themselves out. >> how do you invest? >> i think you want to be defensive. i think the u.s. market will outperform europe. i think we are looking more on the defensive side, utilities, health care, among other. energy. if inflation is go to pick up. those would be some of the areas that i think i would look at. and emerging market equities, maria, starts to look interesting again.
>> i agree with kumar on the u.s. market. and i'm certainly partial towards technology, health care and industrials. >> all right. we'll leave it there, carla, sri, good to have you on the program. >> thank you. >> carla harris, komal sri-komar. the debt load in the united states. i'll talk to house budget committee chairman paul ryan about the danger of defaults and the outlook for political compromise. and barbecue economics heats up for the weather. what is on consumers' menu this grilling season? and as we go to the break, take a look at how the stock market ended the week.
every dollar the president wants to raise the debt limit, let's cut more than a dollar's worth of spending. it's been pretty clear spending is the problem, maria. if we don't get a handle on our spending problem around here, we're going to have a debt crisis. the problem with the debt limit, it's the only game in town. the senate for almost 108 days now has chosen not to pass a budget. so the budget process is not working here. we passed our budget, but nothing else is occurring. so the only chance we have at getting some movement on deficit and debt is this debt limit issue. >> so let me ask you about that. where in your view is the low-hanging fruit in terms of the easy stuff to be cut? >> well, we propose $6.2 trillion in cuts off of the president's budget or $5.8 trillion in cuts off the current law baseline. the president wants a $2.4 trillion increase in the debt limit to get him through 2012. so we've shown more than enough that you can cut. now the kinds of entitlement reforms are all phased in.
especially discreationary spending has gone up enormously. 24% in their base budget even without stimulus spending. >> do you think, congressman, that we will see a deal reached before the august 2nd deadline? could it be that we would take it all the way to august 2nd? >> i can't answer the question because i don't know the answer to it, maria. can we? of course we can. can we right something? yes, we can. committee have offered very, very specific things to do. we have offered a budget that lays it out. the problem is we have not gotten any counteroffers from our partners on the other side of the aisle. no budget from the senate and no proposal from the white house that actually deals with this problem. the president's budget dramatically increases the debt. he came out with a speech which the cbo tells us they can't score a speech. so we really haven't had any credible alternatives from the over side of the aisle on how to achieve this. >> gene spurling just said if the president does not want to raise taxes on the middle class. a lot of people are criticizing the republicans for just taking too hard a line on these negotiations. >> so here is the problem,
maria. look at what current law already does. the top tax rate, which is what most small businesses pay, locs, the effective tax rate under current law because of president obama goes up 44.8%. so if you're living in a state like wisconsin, you throw state income tax on that, we are taxing our small businesses at over 50% in 2013. that's already coming in current law. 50% of americans get their jobs from these kinds of small businesses. one in four americans get their jobs from chapter s corporations alone. and we're already bringing their tax rate to about 45%. and that's already occurring. and what president obama wants to do is raise it even higher than that. that is going to kill jobs and economic growth. what we simply want is more growth and economic -- more jobs and growth and spending cuts. >> let's talk about your plan, congressman, and the cuts that we would see to medicare. as you know, the other side is saying well look what congressman ryan's plan does to medicare recipients. now we all me that these are hard choices to make.
>> right. >> and in order to get our arms around a balanced budget, we need the make these tough choices. how significant are the cuts in medicare, and can they say the same thing you're saying in terms of overtaxing and overimpacting one group of people? >> so with our plan, medicare does not change benefits at all for people 55 and above. so if you're 55 years old or older under our budget, you get the benefits right now you have coming to you. but in order to cash flow that commitment, which does require borrowing, you have to change the program for my generation, the x generation. people 54 and below. and the way we propose to change is a system that works like the plan we have in congress as federal employees, or like the system recommended by the clinton commission in the 1990s. you get premium support. you get a list of guaranteed covered options for medicare. medicare subsidizes. less if you're rich. more if you're poor and you're sick. that makes it solvent. the alternative is obamacare. obamacare takes a half trillion from medicare to spend on other programs and then it puts a
rationing charge in charge of cutting reimbursements to doctors affecting current seniors. so obamacare ends medicare as we know it. it takes a half trillion, and does nothing to save it from bankruptcy. the cbo is telling us in nine years the medicare goes bankrupt. we get rid of the rationing board. we stop the raid. we guarantee to 55 and above and save it for the next generation by reforming it. >> if we don't get a deal done in terms of the debt ceiling, there a real risk of a government shutdown? >> well, shutdown a cr scenario. default i think is the real risk you're concerned about. we believe, and i believe the law is pretty clear about this, the treasury has the ability to prioritize spending so make sure default does not occur. nobody wants to see us go down that path. but i think it would be dangerous if we just rubber stamp an increase in the debt market because that would show the current markets that the u.s. government has no means or ability or aptitude or ability to get this thing under control, to get borrowing and spending under control. we have to have a down payment on the debt and the deficit.
summer grilling and the grilling season are home depot's russel smith and adam rapaport, editor and chief of "bon appetit." thank you so much for being here. >> hey, no problem. thanks for having me. >> we'll get to adam in a second. first up, home depot reports actually grill sales are trending up, which is interesting, the last few years. what are you hearing from customers? what questions are they asking? what do we need to know about the different grills out there? >> the first thing someone comes in to buy a grill, you want to know how big of a group you're actually cooking for, and how often. just a couple people once a week, i can find the right grill. a big party, cooking family every night, you want a more expensive, better-made grill. >> okay, this one? >> exactly. this is a $69 webber. it's a charcoal grill, great for a small group. if you want to take your time grilling, charcoal takes longer to go than gas. >> what about other high-end products? are there a lot of products to go along with these grills? >> there are all kinds of options when it comes to charcoaling and your own personal flavor and stuff.
there are different wood chips you can use to give it a smoky flavor there is cherry, mesquite, hickory, stuff like that. >> and this grill looks like a higher end than the weber. >> this is an infrared charbroil. it retails for $249 at home depot. what is nice about this one is the flame doesn't actually touch the meat. it sears in the flavor so you get really juicy steak and burgers. >> and you said the way this works the heat goes in. >> it radiates the heat in. sears in the meat and keeps the juices inside so you don't get dry meat at all. >> very interesting. and this is $249? >> 249. >> very affordable. both, actually. adam, you are cooking up a storm here. great to see you. >> good to be here. >> thanks for joining us. what is the strategy for grilling up the perfect burger? tell me about the meat you're using. >> burger, you don't need fancy marinades. chopped onions, brown chuck, 20% fat, you don't want that tight,
hard burger. the deal is if you have fat, that's where the flavor is at. if you buy the lean burger because you're healthy, it's not going the taste good. it's the weekend. have some fun. take the burger, a little salt and pepper. you lay it on. and don't be the guy that comes over and keeps pressing it down and the juice runs out. that's how you get flame-up. when the fat drips then the fire chars it and you get the burned taste which you don't want. >> what about the pricing in terms of the meats? a real price difference when you talk about grass-fed versus green-fed ground beef. >> we're also talking steak. if you're talking steaks, you can spend a lot. if you want a prime rib eye dry aged $25 a pound. you can get what we have here is a skirt steak, which is what they make fajitas out of. a lot of flavor, super tender, really yummy. probably between $6 to $10 a pound. you can make marinade franchise you have a flank steak which is great for crowds, hanger safe,
which is one of the affordable cuts with a rich beefy flavor. but a expensive steak like a rib eye or porterhouse, don't mess with it. you're paying $25 a pound for a reason. all you need is salt and pepper and don't overcook it. >> this steak and the burger, how am i not overcooking it? >> how do i don't like your burger? >> ulike it medium to well. i'm sorry. >> i'm going to cancel the segment! >> i'm boring. >> if you're tasting your own burger, you can literally feel when it's done. the more it's cooked, the harder it gets. if you want it rare, a few minutes on each side. me medium rare four minutes on each side. >> toppings. what is going on over here? >> i need to grab the steak. hold on, maria, hold on. we got to get your tongs. you need to vu good equipment. take the steak off. we've got your medium well burger in the back. a better burger right here, medium-rare. i will bring it over. this is a chimichurri, which is
a argentine herb sauce. you have cilantro, oregano, parsley, oil, vinegar. >> excellent. >> it's very simple. you lay this on you will be addicted to this all summer long. here a special sauce. you might have been to mcdonald's once or twice or perhaps in-and-out burger in louisiana. ketchup, mayo, a little adobo, a spicy seasoning. >> we should point out everything on this table has gone up in price. >> it has. but not a lot. everything is more expensive now because of gas prices and what not. >> commodities. >> but you can buy ground beef that is affordable. you can buy skirt steak is affordable. if you want to buy the fillet mignon and really splurge, you can go ahead. but there are affordable options. >> the barbecue is a comfortable idea. do you think hot dogs and hamburgers are immune to economic weakness? >> yes. what people love is hanging out by the grill. we have our beer in hand, we're talking, catching up with friends. if you live in the northeast, you basically have three months to do it before it gets too cold
or dark. enjoy it while it lasts. >> a lot of fun. thank you very much. russel thank you very much, great ideas for grilling. up next on "the wall street journal report," we'll take a look at the news this upcoming week that will have an impact on your money. stay with us for that. and then a walk down wall street to a store that is about more than convenience. this neighborhood shop. stay with us. a rescue unit. go ! the speed of they're downloading a music album. the first network to finish gets rescued. does your phone know that we're racing ? done ! verizon's done ! i've got seven left ! the fastest network in america. verizon. built so you can rule the air. now powering the lg revolution. how'd you learn to do that? what'd you use? every project we finish comes with a story built-in. it's how our rough ideas become "you did that yourself?"
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wsjr.cnbc.com. and i hope you'll follow me on twitter. look for @maria bartiromo. now the stories in the week ahead that may move the markets and impact your known this week. earnings season kicks off. we will get second quarter reports from alcoa, jpmorgan chase, citigroup and google among others. tuesday's last month meeting open market committee will be released. and on wednesday, federal reserve chairman ben bernanke will testify before the house services financial committee on economic issues. the retail sales for the month of june will be reported, a and the producer price index is also out. the ppi of course tracks inflation at the wholesale level. friday we'll get the consumer price index, which measures inflation at the consumer level. finally, a one-stop shop that is all business. the newest wall street location of drug store chain duane reed opened in the former home of the bank of manhattan trust, just down the street here from federal hall. the 22,000-square-foot store was specially designed for the
financial district. it offers spa services, an onsite doctor, a sushi bar, even a stock ticker to keep local professionals plugged in while running errands. parent company walgreen's indicated this could be a model for future community-specific drug stores. and we're returning to the neighborhood as well for another summer on the street. my thanks to the federal hall national monument and the new york stock exchange for hosting us at this location. that will do it for us today. thank you so much for being was. next week, join me. we're going inside the latest innovations in video games at microsoft. where you are the controller. each week keep it right here where wall street meets main street.